“Can’t make consistent trading profits. How to improve?”

July 7, 2011

JUST ASK: “Can’t make consistent trading profits. How to improve?”
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Written by Leong Chan Teik
Saturday, 16 January 2010 04:43
In this weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert to provide answers. Below is a question from a reader on how to be more successful in stock trading. We asked three people to give their views:

a) Leong Sze Hian, President of the Society of Financial Service Professionals;
b) Musicwhiz, a 30-something value investor who does his homework on a business fundamentals before investing.
c) Robert Stone, 51, a highly successful investor whose investments include Anwell Technologies and Singapore Windsor – in both companies he is among the top 10 shareholders. 
d) Winstorn, 52, a full-time trader and a former director of a private company, who actively posts his stock ideas on NextInsight’s forum.

NEXTINSIGHT READER

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Can make a living out of trading?

Reader: I have been an active trader on the Singapore stock market for a year using Technical Analysis (candlestick charts) and fundamental analysis (stock news and related industry news). However, I have still not been able to successfully generate consistent profits out of trading Singapore stocks.

I tried using contra purchases after I have picked my stocks and always look to get out within a week thus I always look at the daily to weekly charts.

What do you suggest to the young budding traders out there in Singapore who want to trade local stocks and do you think SGX stocks could be traded? If not, how can I make a living out of stock trading and how much capital do I need to start trading?

FINANCIAL ADVISER

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Leong Sze Hian, president, Society of Financial Service Professionals.

Leong Sze Hian: Dear reader, it is never easy to trade and make decent profits consistently. Especially when we study the same books, use the same techniques and strategies as everybody else, listen to the
same gurus. I don’t really have the answer to your  question. 

A suggestion I have for you is to try this strategy – buy if price falls 4% sell, if up ride the profits until it
falls 4% from the high. If you are wrong 4 times out of 10, right 6 times and is able to ride a decent profit on 1 of the 6, you may be happy! 

If you can generate 20+% per annum consistently – you are already in the likes of Warren Buffet! The key to long term success in investing is managing the risks, and not focusing too much on the returns
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About the Author

Leong
Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.